Early this morning, after about a week of rumors, news broke that Bally Sports announced a deal with Amazon where Prime Video would become the new digital carrier for Bally Sports. This deal would also help them out of bankruptcy.
As a subsidiary of Diamond Sports Group (DSG), Bally Sports currently holds broadcast rights to 37 professional and college sports teams. The bankruptcy of Bally's is a story that first emerged about a year ago and has been a drama-filled narrative ever since. Now, in terms of how the bankruptcy filing initially happened, here is how we got here:
2019: Bally took on an $8B debt to enable the acquisition of what used to be the regional Fox Sports channels, aiming to shift the landscape and take control of regional sports networks in the US. This strategy was designed to hedge against cord-cutting by launching a cable-bundle autonomous direct-to-consumer digital offering. The exact number of channels Fox owned needs to be verified.
January 2023: Reports indicate that MLB was reluctant to grant local streaming rights to Bally, possibly because a third of their viewers are not adept at using platforms such as Facebook, a factor that wasn't anticipated.
February 2023: Bally missed a $140M interest payment and subsequently filed for Chapter 11 bankruptcy the following month.
May 2023: DSG failed to make payments to the San Diego Padres and Arizona Diamondbacks. Consequently, MLB intervened and managed the broadcasts through MLB.TV and their newly minted local media group. Additional teams experiencing missed payments included the Guardians, Rangers, Reds, and Twins.
July 2023: Bally Sports sued Sinclair (the parent company of Diamond), alleging that Sinclair siphoned large sums as a way to mitigate their impending bankruptcy.
October 2023: After terminating their deal with Bally, the Phoenix Suns partnered with Gray Television to launch their own DTC streaming service, priced at $15/month or $110/year, in time for the 2023 NBA season.
November 2023: Bally negotiated a new deal with the NBA to revert their local deals back to the league, effective from the 2024-2025 season.
January 17, 2024: Amazon acquired a minority stake in Bally for $100M, which included the local broadcast rights for all their sports teams.
So Why Does This Matter? And How is Google Impacted?
In most cases, people subscribe to cable primarily to watch their local teams, or because they are unaware of what a Virtual Multichannel Video Programming Distributor (vMVPD) is, for various reasons. Regional Sports Networks (RSNs) have long been able to secure more money by being included in cable bundles, being subsidized by people who choose the most basic package available. And in doing so, they continue to be among the single most expensive channels within a cable bundle.
Ever since Big Tech entered the chat, streaming rights for sports have been selling at a premium. A recent example is Peacock paying the NFL $110M for the last weekend's Chiefs-Dolphins game. Amazon is acquiring several market segments for pennies on the dollar compared to what was paid for those rights during the previous rights cycle. With the teams they have now secured, there are millions of potential new customers they can sign up (or activate within their Prime bundle), adding even more utility to their bundle.
Regarding cable-cutting, most reports indicate that we crossed the 50% threshold in 2023. And for many who still maintain cable bundles, a significant reason is often to retain access to RSNs, which are unavailable in most cord-cutting packages such as YouTube TV, Sling TV, and Hulu TV.
This is where it also becomes a win for Google. Since its launch in 2017, YouTube TV has become the largest Multichannel Video Programming Distributor (vMVPD) in the US, with 34% of the market share in 2022. Hulu was a close second at 30%, but its market share has been declining year-over-year since 2019. Now with Bally Sports going to a top 2 streamer, Youtube TV has become a viable options for the cable-cutting-curious.
Much more will come of this, but so far all news is good news for sports fans, poor Bally Sports, and advertisers alike.
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